Investing in City PR will benefit all of us

Most of us would be very happy to be part of a business that is growing steadily, has money in the bank and every year makes a profit. Unfortunately, the City doesn't have such a simple view of things.

Companies quoted on the London Stock Exchange or any other of the major share-dealing markets must not only perform well, they must perform better than expected.

Any salesman will tell you that, if you are conservative in your estimate at the start of the budget year, then the chances are you will beat your target and be rewarded accordingly. Unfortunately, Public Limited Companies don't have the comfort of this annual cycle and must be bullish year-round to keep investor confidence and maintain share price.

The pressure on the boards of these companies is enormous. Why, then, would anyone willingly float? The prime reason is to release funds for further investment - and, of course, you have to talk up the future return, which adds to the expectation.

It grieves me to see healthy, growing hospitality businesses talked down in the financial pages of the national newspapers because they have not outperformed their own targets, even though they have outperformed the market.

I believe that hospitality has a harder time of it than most industries. We're fragmented into dozens of sectors - hotels, pubs, clubs, B&Bs, restaurants, staff catering, etc - and analysts find us difficult to understand. They can't sum us up in an easy sentence as they can, say, the property market.

While contract catering may be having a good time of it, hotels may be struggling. Even within a sector - for example, restaurants - London-based operators may be experiencing a downturn while there is a boom in the regions.

Then there is the sheer number of companies involved. Whereas you can count the major food retailers, accounting for 80% of the market, on two hands, independent and multiple operators still vastly outnumber the national chains in the hospitality industry.

Also, our cost base is higher than for most manufacturing or retail businesses. We need prime sites, which makes for high rent and rates. We employ far more people, and wages often rise ahead of inflation.

There are one or two analysts who have set out to crack this sector, and all credit to them for their perseverance. The majority, however, rely on market reports that vary in depth and accuracy.

Through our trade associations, we have courted Government and gone some way towards making our case with the legislators for a lighter hand when applying yet more regulations. However, there is no concerted approach to the City. Each operator, and indeed supplier, has to present their own case, backed by whatever industry data they think appropriate.

Although Mustard is a private company, backed by Phildrew Ventures, there is a possibility that one day we will float. When and if we did, I would like to think that we would be going to market with an attractive proposition, against a background of investor enthusiasm for the hospitality industry.

What do we need to do for this to become more of a reality? First, I would like to see the trade bodies add analysts and influencers to their target audience - and, if they are on the list already, I'd like them moved up the pecking order.

Second, the only open-invitation networking and influencing event I can call to mind is the Pub Investment Conference, although there may be others. I would like to see more of these. This means that we must provide organisers with the idea and the encouragement by providing interesting, controversial speakers and making time to attend.

Third, I would like chief executives and managing directors of medium-sized businesses to join me in making an effort to break down misconceptions of our industry. The City won't come to us, so we need to go to them - and we can't leave it to the Granadas and Whitbreads of this world to present our case. They have enough on their plate defending their own share prices.

Stephen Evans is chief executive of Mustard Entertainment Restaurants, non-executive director of Dineline and a member of the Restaurant Association national committee